It looks like Toast is paying about $15.7 million to buy out of a commitment to 111,294 SF on the 8th floor for 6.5 years plus 22,495 SF on the 5th floor for 5 years. That works out to a $/sf buyout rate of $18.73 per year. There are also provisions in the agreement that if the landlord lands a new tenant for the space during the time Toast would have occupied it, then Toast gets a portion of their $15.7 million buyout refunded.
The original lease plus 7 amendments were signed over the period of 2015 - 2021. There’s a decent chance Toast was on the hook for lease payments in the area $65 - $70 per sf per year. If they were paying $65 per sf, they’ll be saving about $38.7 million with the buyout relative to seeing the lease through.
Presumably they’ll consolidate into their smaller space on the 5th floor that they’re keeping through the end of next year after vacating their larger space on the 8th floor at the end of next month. If they can find space for 2025-2029 for less than that $38.7 million (putting aside their IRR and any possible refunds - which work in opposite directions in the calculation - for now) they’ll come out ahead on this deal. That’s very likely if they’ve determined that they’ll only need, say, max 50k SF of space going forward, given work from home trends.
